Instant loan app scam: don’t fall prey to unauthorized mobile apps, warns RBI

Consumers should never share copies of KYC documents with unidentified, unverified/unauthorized applications, RBI said.

Hindustan Times, New Delhi | Throughhindustantimes.com | Edited by Poulomi Ghosh

The Reserve Bank of India has warned against loans offered through unauthorized digital platforms, with mobile apps promising a quick and hassle-free process. The warning comes amid a major instant loan app scam surfacing in the country with its multi-city network.

Three people have committed suicide in recent weeks after allegations of harassment by debt collectors following which 17 people were arrested in Delhi, Gurugram and Hyderabad.

“There have been reports of individuals/small businesses falling prey to the growing number of unauthorized digital lending platforms/mobile apps on the promise of getting loans quickly and hassle-free. These reports also mention high rates of “excessive interest and additional hidden fees charged to borrowers; adoption of unacceptable and overbearing recovery methods; and misuse of data access agreements on borrowers’ mobile phones,” the RBI said in its notice.

Legitimate loans can be offered by banks, non-bank financial companies registered with the RBI and entities regulated by state governments, the RBI said urging people to check the background of entities that offer easy and lucrative loans on various digital platforms.

“Members of the public are hereby warned not to fall prey to such unscrupulous activities and to check the background of the company/company offering loans online or through mobile applications,” he said. .

Urging people never to share copies of KYC documents with unidentified, unverified/unauthorized applications, RBI said such fraudulent activity can be reported to law enforcement or RBI’s Sachet portal ( https://sachet.rbi.org.in).

“Reserve Bank has also required digital lending platforms used on behalf of banks and NBFCs to disclose the name of the bank(s) or NBFCs in advance to customers,” the notice reads.

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